Roseberry Mercantile Pvt. Ltd. Vs ACIT (ITAT Delhi)
Conclusion:
While on search nothing adverse was found so as to prove that documents filed during original assessment proceedings were false or untrue, AO on same set of material could not take a different view than already taken at the time of original assessment merely because a search had taken place.
Held:
Original assessment was completed u/s 147/143(3). A search u/s 132 was conducted in the case of bank account of assessee and an amount of Rs.5,48,50,000/- was seized. Since assessee did not file the requisite details as called for by AO to substantiate the identity and credit worthiness of the share applicants and genuineness of the transactions, AO made addition of unexplained share capital and unexplained share premium received by assessee during the impugned assessment year. Assessee contended that no incriminating material was found during the course of search and AO in the assessment completed u/s 147/143(3) had accepted such share capital and share premium and no contrary material was found during the course of search or after post search inquiry. It was held when assessee during the course of reassessment proceedings had filed the requisite details such as the copies of share applications, bank statements including details of allotment, premium charge, etc., and nothing adverse was found during the course of search proceedings and considering the fact that nothing adverse during post search inquiries was found to negate the documents already filed at the time of the reassessment proceedings, the present AO, on the same set of material could not take a different view than the view already taken by his predecessor at the time of original assessment merely because a search had taken place. In view of the above discussion, addition made by AO was not justified. Accordingly, AO was directed to delete the addition made by him u/s 68.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order dated 10th March, 2015 of the CIT(A), Meerut, relating to Assessment Year 2008-09.
2. The facts of the case, in brief, are that the assessee is a company and derives income from interest on loans and advances granted by it as an NBFC and profit on sale of mutual funds. The return of income was filed on 6th November, 2008 declaring total income of Rs. Nil. The return was processed u/s 143(1) on 8th July, 2009.
Subsequently, the case was reopened u/s 147 after duly recording the reasons in writing. In response to notice u/s 148 of the IT Act dated 23rd October, 2009, the assessee submitted to treat the original return as return filed in compliance to notice u/s 148 of the Income Tax Act, 1961. Subsequently, the Assessing Officer completed the assessment u/s 147/143(3) on 31st December, 2009 determining the total income at Rs.73,510/- wherein he made certain additions by disallowing STT debited to P&L Account, income-tax debited, disallowance u/s 14A and preliminary expenses.
3. Subsequently, a search operation u/s 132 of the IT Act, 1961 was carried out in the Subharti group of cases on 12.11.2010. Being a part of the search, a search was carried out at the bank accounts of the assessee situated at Oriental Bank of Commerce, Subharti Dental College Branch, Subhartipuram, Meerut during which cash of Rs.5,48,50,000/- was found and seized. In response to notice u/s 153A, the assessee filed the return declaring loss of Rs.21,619/-. During the course of assessment proceedings, the Assessing Officer observed that the assessee company has issued equity shares of Rs.87,12,500/- on a premium of Rs.16,55,37,500/- during the year under consideration. He asked the assessee company, vide questionnaire dated 18th October, 2012 to furnish details as to how the premium was worked out by the issue managers, auditors, etc., and the copies of the working and material relied on. In absence of any compliance to the statutory notices issued by the Assessing Officer from time to time to prove the identity, credit worthiness and capacity of the share applicants and genuineness of the transactions, the Assessing Officer invoked the provisions of section 68 of the Act and relying on the decision of the Hon’ble Delhi High Court in the case of CIT vs. Nova Promotors & Finlease (P) Ltd. (2012) 18 taxmann.com 217 (Del), made an addition of Rs.17,42,50,000/- to the total income of the assessee.
4. Before the CIT(A), the assessee made elaborate submissions. It was submitted that the issues for increase in share capital were examined in the original assessment for assessment year 2008-09 and no adverse finding was given by the Assessing Officer in the order passed u/s 143(3). It was submitted that on the date of search, assessment for assessment year 2008-09 was not pending and no incriminating document relating to the issue of increase of share premium was found or seized during the search. The assessee submitted that the details which were called for by the Assessing Officer were also submitted by the assessee during the course of original assessment proceedings. Referring to the decision of the Mumbai Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. vs. DCIT, it was submitted that no addition can be made. The decision of the Hon’ble Allahabad High Court in the case of CIT Meerut vs. Nav Bharat Duplex Ltd. (2013) 35 taxmann. 289 was also brought to the notice of the CIT(A).
5. However, the ld.CIT(A) was also not satisfied with the arguments advanced by the assessee and upheld the addition made by the Assessing Officer by observing as under:-
“4.4 I have gone through the rival submission as above. The entire argument of the AR is primarily based on the fact that firstly, original assessment was already abated and secondly, that in the search, no incriminating material was found. However, the AO has mentioned in the very first paragraph of the assessment order that cash amounting to Rs.5,48,50,000/- was found and seized during the search. It is further seen from record that the company had shown the following returned income for the assessment years falling within the block period:
